That means the State Agency for the Regulation of the Food Products Market will start buying up meat and dairy products, two of the hardest hit industries in Lithuania by the Russian meltdown, and then barter the products to Russia in exchange for gas, oil and other resources.
While the government says Lithuania has enough financial and currency protection to defend financial institutions against the crisis, it realizes exporters needed a helping hand. Although many Lithuanian companies have settlement agreements with Russian ones in dollars, the Russians are unable to pay Lithuanian exporting companies.
The government decided on the move when meat and dairy exports to Russia virtually stopped in the wake of the economic crisis there.
"Many companies are not exporting to Russia due to the large debt the Russians owe," said Antanas Rekesius, a spokesman for the Agriculture Ministry. "As of Sept. 4, they owe dairy companies about 32 million litas ($8 million) and meat companies about 1.7 million litas."
The minister of agriculture was sent to St. Petersburg with the goal of hammering out agreements and new contracts dealing with the export of products to Russia.
"Although the Russians usually pay in dollars, the banks there stopped selling them," said Alvydas Ramanauskas, president of the Lithuanian Dairy Association. "Now, all milk products, cheese, butter and so on are not being (exported to Russia) because we do not need rubles."
Ramanauskas said that the government started making efforts to prop up exports manufactured before September. However, he is critical of a government decision to allow some payments by the Russians to be in barter form
"Barter payment is not the best way for companies to develop themselves," said Ramanauskas. "Do you think it would be good if I received 30 million litas worth of [Russian] furniture? Where would I put all that furniture?"
According to "Veidas," a weekly magazine, one of the largest dairy companies, Birzu Pienas (Birzai Milk), is not halting their exports to Russia. According to the magazine, the company's general director, Vladas Songaila, stated that nothing was being stopped because the situation has always been similar and that the company consistently has "trouble with the Russian side."
The Lithuanian meat companies are also being affected by the crisis. According to Nerijus Kuzma of Klaipedos Maistas (Klaipeda Foods) marketing department, the situation of meat companies will be "bad for everyone until the situation in Russia improves."
While the export situation appears dismal, the arrival of an Estonian meat company, Rakvere, may affect the market in Lithuania as well. A Rakvere spokesman told TBT that although the company just established itself in Lithuania, they "expect" to snag 30 percent of the market by selling their products at discounts of as much as 10 percent. While some Lithuanian companies are not convinced of Rakvere's claims, some are saying the arrivals will not help matters much.
While speaking at the Vilnius Conference '98, Gunter Burghardt of the European Union was not only hit by the usual array of questions centering around Lithuania's entry into the organization, but by Russian crisis-influenced questions as well.
"Russia is the EU's second largest export market for agricultural products after the United States," said Burghardt. "A lot is at stake for the union itself. The last figure I saw was between 5 and 6 billion ECU per year on agricultural exports to Russia. It's much more than Lithuania's or any other candidate country's exports. So in a way, we are in the same boat."
"My conclusion would be to look for ways together how to make sure exports to Russia can continue, both from the EU and Lithuania," Burghardt said.
For Lithuania, this means the country is not alone. But if there's any comfort in that fact, it is tempered by the realization that the problems in Russia have effects that reach far beyond Lithuania's borders.
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